Out of Work, Not Out of Oomph

The mental and physical impact of long-term unemployment may be overstated

By some accounts, Robert Weiss should be damaged goods. Despite a degree in economics from Harvard, an MBA from MIT, and a résumé chronicling years of senior titles and six-figure incomes, the 60-year-old New York City human resources executive was jobless for well over a year. According to academic studies from institutions such as Columbia University and the Paris School of Economics, that places him in a talent pool facing higher mortality rates and eroded skills. As a skilled older worker, Weiss might be expected to be particularly depressed—and recovering from that could hurt his productivity in any new job. The implication for employers: Be wary when hiring from the pool of 6.2 million Americans out of work for 27 weeks or longer.

Yet Weiss is doing fine. He kept busy and motivated while job-hunting by working the phones, scheduling breakfast meetings, and attending networking events. He's several months into a new job he's excited about, as vice-president of compensation and benefits at Kaplan (WPO), the test preparation and education company, and he says he makes close to what he earned in his previous job.

The accepted line on the long-term unemployed is that they suffer deep mental scars. Tom Rath, global practice leader at Gallup, cites a study in The Economic Journal that found that those out of work at least a year took longer to recover than those who'd lost a spouse. "At best, it takes several years to get back to where you were," says Rath. The higher your skills, the more likely you are to suffer psychologically—especially if you live in an area where unemployment is low, says Andrew Oswald, a behavioral science professor at University of Warwick.

What some academics and labor economists are now starting to question is whether the results of widely accepted studies should be applied to the current situation. They note that many studies of the emotional and physical fallout from sustained unemployment are rooted in an era long past. The nature of modern careers and the tools available to the jobless are vastly different even compared with just 10 years ago, and workers have far more resources and networks.

Start with the assumption that the long-term jobless face a multitude of physical and mental ailments. Numerous studies have pointed to such collateral damage, from sociologist Mirra Komarovsky's research on the impact of joblessness on families during the Depression to much cited research on mortality rates among men who lost jobs in Pennsylvania in the 1970s and '80s.

Daniel G. Sullivan, research director at the Federal Reserve Bank of Chicago and a co-author of the Pennsylvania study, cautions that "we were looking at an extreme case [of] workers who lost jobs they'd had for long periods of time." Workers who have moved around in their careers may react differently to unemployment, he notes. Moreover, adds co-author and Columbia University economist Till von Wachter, higher death rates were tied to losing a job—not to how long a person was out of work. Says Von Wachter: "It's very hard to establish a clear link between the duration of unemployment and mortality rates."

Von Wachter is even more skeptical of job loss as a cause of long-term depression. "Just because there's a correlation doesn't mean there's causality," he says. While studies of unemployed workers in Germany and the U.K. suggest psychological damage that can be severe and lasting, other studies highlight resiliency. The University of Warwick's Oswald found that "once you find work again, there's a huge recovery in happiness. There's nothing wrong with these individuals. They just need work."

It's also not clear that a long time out of work erodes skills significantly. Heidi Shierholz, an economist at the Economic Policy Institute, argues that "when you look at the U.S. labor market, it's hard to think of many jobs where the world would pass you by" after six months or more.

Software engineers perhaps, but most Americans aren't in highly technical or fast-changing careers—and those who are often have access to courses, blogs, social networks, and other tools.

The debate about chronic unemployment is rooted in a 20th century definition of work, in which people have stable jobs, says Richard Price, a psychology professor at the University of Michigan's Institute for Social Research. As jobs become more fluid and temporary, workers can adapt with training. "Those past studies are true of those people at those times, but we've undergone huge societal changes," he says. As fewer people think of a full-time job with one employer as the norm, the impact of losing a job will change. What hasn't kept up, Price says, is the policy response: "When you blame the victim and do nothing to help them find another income, you create chronic unemployment."

A look at the recent experience of Teresa Fritschi of Rochester, N.Y., yields a sense of how the nature of the work is changing. While Fritschi, 49, spent the past few years looking for a job, she also built on 26 years of experience in marketing and communications by creating the retail website thistleandbroom.com. It doesn't pay the bills, she says, but "I've developed new skills." She figures she'll mostly freelance from now on.

There's still a stigma to long-term unemployment. Yet executives like Ellen Michel, who heads human resources for Torrance (Calif.) manufacturer Pelican Products, recognize "a lot of good people are out of work [because] manager positions are few and far between." Finance sector recruiter Paul Sorbera, president of Alliance Consulting, says many clients want "seasoned professionals with a Rolodex and client relationships." Being out of work for a year isn't a big deal if someone proves they've kept up relationships, he says.

Kaplan's Weiss says he doesn't feel traumatized—just happy to be back in the game. His biggest worry is for his daughters, ages 26 and 29. The older one is a stagehand-turned-school administrator who just lost her job; the younger is a struggling screenwriter. "This generation doesn't seem as focused on career," says Weiss. "They're more willing to put together a number of jobs to make a living." It's all fine, he says, as long as they make ends meet. And yet, he says, "If they're not more gainfully employed in 12 to 18 months, I'd start to worry about their self-esteem."

The bottom line: The accepted belief that long-term unemployment causes lasting physical and psychological damage may be outdated.

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